Quam bene vivas referre, non quam diu.

Main menu

Post navigation

Taxes, or Whose Money Is It? II

This is the second of a short series of posts that explores the nature of taxes. In the first post, I looked at the property nature of taxes: whose money it was, both before and after, the taxation process. In this post, I’ll look at a second and subsequent set of questions: the nature and purpose of government and the purpose of government spending. In a third post, I’ll answer a question concerning the utility of revenue neutrality for tax program changes.

Having established in that earlier post that, under our social compact, the money collected by our government in the form of taxes remains our money and not government’s, we can address that next set of questions, beginning with: what is the purpose of our government? With an answer to this, we can address the second question of our present set: on what should our government be spending our money?

Reviewing, briefly, we recall that men began in a state of lawless nature, even though each had certain rights and properties inherent in their very being, and in these rights and properties, each man was the equal of every other. This so-called Natural Man’s existence, though, was quite Hobbesian: the stronger could—and would—prey on the weaker: might made right, and the Devil enjoyed the hindmost. Out of this existence, groups of men agreed among each other to form social compacts and then to create governments in which they would vest some portion of their individual rights. In this way, a government could act to protect all of the members of the compact, against both external marauders and fellow members of the compact. Government, thus, would enforce each member’s inherent equality and his endowment of rights and consequent liberties.

I also mentioned, tangentially, in that earlier post that Locke, Rousseau, et al., held that the only legitimate government was one that governed with the consent of those being governed—the second two conditions I described in that post. Take note, thus, of the means by which Natural Men form their government: it is via a wholly voluntary agreement among the members of a group—a social compact—to form themselves into a polity and then to form a government to lead that polity. By being the outcome of an agreement among men, their government is necessarily subordinate to those men. Indeed, our own principles statement takes both the need for consent and that inherent subordination of government to men as First Principles (our endowment is one of our First Principles, also, but that is beyond the scope of this post). On consent, our Declaration of Independence says in so many words:

That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed

The inherent subordinate role our government plays is clearly stated twice:

That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

and

But when a long train of abuses and usurpations…evinces a design to reduce them…it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land….

Thus, our nation is a nation governed by law, not by government. Further, Article I, Section 9, the 9th and 10th Amendments, and the Bill of Rights generally make clear the American Sovereign is We the People, not our government.

Having arrived at the subordination of our government to us, what is it we have instructed our government to do? We have required it, in a concrete way, to act to preserve our endowment of rights, our liberties, and to do no other thing at all. This is clear in our Constitution’s Preamble:

…to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity….

Our government has, by design, that Lockean/Rousseauan purpose: to secure us from external threat, to protect us from each other, and in the process to enforce our rights and freedoms. Absent from this is an obligation of government to protect us from ourselves. That’s wholly our responsibility, as are the outcomes of our actions, where those affect us.

Within this mandate which we have levied on our government, then, on what have we authorized our government to spend our money? Once again, we specified this in our blueprint, in the first clause of Article I, Section 8:

…Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States….

This clause explicitly identifies the purpose for which we have authorized our government to collect taxes, but since it makes no sense to collect taxes except in order to spend them on those purposes, this enumeration of taxing purpose is also is an enumeration of spending purpose.

However, Treasury Secretary Alexander Hamilton and today’s Progressives argue that this clause, in fact, authorizes spending for any purpose that Congress might decide is useful. The clause’s position in Section 8, which enumerates the powers of Congress, both Hamilton and our Progressives consider irrelevant. James Madison’s argument, though, put forth in The Federalist Papers #41, remains valid today.

Had no other enumeration or definition of the powers of the Congress been found in the Constitution, than the general expressions just cited, the authors of the objection might have had some color for it; though it would have been difficult to find a reason for so awkward a form of describing an authority to legislate in all possible cases. …

But what color can the objection have, when a specification of the objects alluded to by these general terms immediately follows, and is not even separated by a longer pause than a semicolon?

Plainly, then, far from any purpose at all, the authorization to spend our money is limited to that Article I, Section 8. This drives us to wonder about the first clause’s enumerated purposes: to pay the nation’s debts, to provide for our common defense, and to provide for our nation’s general welfare. Our debts are self-explanatory, as is our national defense (indeed, several of those enumerated powers simply add up to “provid[ing] for the common Defence”). Finally, in light of the spending authorization’s position as the first of a series of enumerated powers, of enumerated taxing purposes, of enumerated spending purposes, those other enumerating clauses clearly add up to our general welfare, our common (as opposed to individual) good. Indeed, our common good is itself bound up in keeping our country safe physically (our common Defence) and fiscally (paying our national debts).

Spending by our government can have no other purpose than these. There is no room in our authorizations, for instance, for bailouts of institutions that have histories of poor decisions and irresponsibility with their own resources. In a free market, the common good is best served by letting failed enterprises fail and thereby letting newer, stronger enterprises replace them. There is no room in our authorizations, for instance, for wealth distribution, since that can only reduce the welfare of some as it tries to increase the welfare of some others. The most effective wealth redistribution, the most efficient wealth redistribution, occurs in a free market where we can make our own decisions concerning the exchange of our own wealth, in the form of our money or goods, for the wealth of another in the form of his goods or money. There is no room in our authorizations, no matter how heart-wrenching, for our money being spent via government mechanisms as a first resort, even on hand-ups those who’ve merely had a run of bad fortune. Our Judeo-Christian heritage enjoins us as individuals to see to the welfare of those less fortunate. Only after we have done what we can, only after our charities and churches have done what they can, only then is it appropriate that government spend our money on hand-ups.